I'm a big fan of buy and hold investing and believe it is the best way for investors to grow their wealth.
To demonstrate how successful it can be, I like to pick out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.
However, on this occasion I'm going to do things a little differently and change the time scale to just five years. This allows me to look at companies that have not been listed as long as normal.
With that in mind, here's how you would have fared if you had invested in these ASX shares five years ago:
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Appen Ltd (ASX: APX)
The Appen share price may be trading significantly lower than its 52-week high, but that won't be bothering longer term shareholders. Since this time in 2016, Appen's shares have thoroughly smashed the market. The catalyst for this has been increasing demand for the artificial intelligence data service company's services from some of the largest tech companies in the world. This includes the likes of Apple, Facebook, and Microsoft, and is being driven by the increasing importance of AI for businesses. Over the last five years, Appen's shares have generated a total return of 62.7% per annum. This would have turned a $20,000 investment into $230,000.
Temple & Webster Group Ltd (ASX: TPW)
Thanks to the shift to online shopping, which has accelerated during the pandemic, this furniture and homewares focused ecommerce company has been growing its sales at an explosive rate. This has led to Temple & Webster's shares surging higher since their IPO in 2016. In fact, anyone lucky enough to have invested in its shares five years ago, would have generated an average total return of 101.5% per annum. This means that a $20,000 investment in its shares at that point would be now worth a staggering $665,000.
Xero Limited (ASX: XRO)
Finally, this cloud-based business and accounting platform provider has been a great place to invest over the last five years. Thanks to its strong recurring revenue, which has been underpinned by its rapidly growing customer base globally, Xero's shares have generated mouth-watering returns for investors. Since this time in 2016, its shares have provided a total return of 53.7% per annum. This would have turned a $20,000 investment into almost $172,000.
